Malawi, officially the Republic of Malawi, is a landlocked country in southeastern Africa with a population of over 20 million people. Malawi’s economy is heavily dependent on agriculture, with over 80% of the population employed in this sector, according to the Food and Agriculture Organization (FAO). The country is also rich in natural resources, including minerals such as uranium, coal and rare earth elements. Malawi is also undergoing significant development, with the government actively seeking foreign direct investment (FDI) to support economic diversification and growth as part of its aggressive Malawi Vision 2063 plan, which has been drafted with support from the United Nations.
Gateway to Africa: Malawi is strategically located in southern Africa and shares borders with Tanzania, Mozambique, and Zambia. The country’s location makes it an ideal gateway to other African markets, with access to over 400 million people in the Southern African Development Community (SADC).
Cost-effective labor force: Malawi has a young and dynamic workforce and the country’s median age is just 16.8 against a global value of 30.3, meaning the future looks bright. The country’s official language is English and the cost of labor in Malawi is highly competitive, making it an attractive destination for investors seeking a low-cost workforce.
Investment opportunities: Malawi is undergoing significant infrastructure development, with the government focusing on expanding its energy and transport sectors. The Malawi Investment and Trade Centre (MITC) aims to diversify the economy by attracting investments in sectors such as tourism, manufacturing,and information and communication technology (ICT).
Innovation: Malawi is making significant strides in innovation, with the Global Innovation Index ranking it among the top 10 countries in Africa. The country’s startup ecosystem is gaining momentum, hosting successful startups like mHub, OCLIYA and Ziweto Enterprises.
Bright future: With a growing middle class and a youthful population, Malawi is poised for significant economic growth in the coming years. The country’s stable political environment and commitment to economic development make it an attractive destination for foreign investors looking to tap into the emerging markets of Africa.
How are labor laws determined in Malawi?
The Employment Act is the primary legal framework that governs employment relationships in Malawi. Other essential legal sources include:
- Constitution of Malawi
- Occupational Safety, Health and Welfare Act
- Workers’ Compensation Act
- Pension Act
- Labor Relations Act
What do MNCs need to know about employment contracts in Malawi?
An employment contract can be in one of the following forms:
- for an unspecified period of time
- for a specified period of time
- for a specific task
Employers must provide written confirmation of the employment terms. Within one month of an employee’s start date. This document should include the names of both parties, the date of commencement of the employment contract, the rate of remuneration and method of calculating it, the nature of the work to be performed, normal working hours, termination provisions and any disciplinary rules applicable to the employee.
How do probation periods work?
According to the terms of an employment contract, skilled workers may be required to undergo a probationary period. The duration of this period is decided mutually by the employer and the employee. However, it cannot extend beyond 12 months. During this period, either party may terminate the employment relationship without prior notice.
What are typical working hours?
The Employment Act states employees cannot work more than 48 hours per week excluding overtime. The number of maximum daily working hours depends on the employee’s work schedule: 12 hours per day if they work no more than five days per week, and eight hours per day if they work six days per week.
Employers are not allowed to require employees to work for more than six consecutive days without providing a 24-hour rest period. This rest period must be taken on a customary day or a day agreed upon mutually by the employer and the employee.
Is overtime pay required?
There are different rates of pay for overtime depending on the circumstances. The minimum rates are as follows:
- For overtime worked on a normal working day, employees must be paid 150% of their normal hourly wage.
- For overtime worked on a day off that an employee would usually have, they must be paid 200% of their normal hourly wage.
- For overtime worked on a public holiday, employees must be paid 200% of their normal hourly wage.
What provisions should MNCs be aware of when it comes to termination?
Contracts in Malawi can have fixed terms or can be indefinite. Fixed-term contracts end automatically upon completion of a specific task or expiration of the term. Meanwhile, indefinite-term contracts can be terminated by either party with written notice.
Employers can only dismiss an employee for valid reasons, such as misconduct, incapacity or economic reasons (retrenchment). If retrenchment is necessary, employers must follow a prescribed procedure that involves consulting with employee representatives, notifying the secretary responsible for labor in writing and then preparing a report within 14 days of the retrenchment. Retrenched employees have priority for rehiring in the company when suitable job opportunities arise.
Employers must pay any outstanding salary or other payments due to the employee within seven days of termination. Employees can request a certificate of termination from the employer that includes the reason for termination but excludes any evaluation of the employee’s work, unless requested by the employee.
It is considered an offense for an employer to terminate an employee an employee’s employment due to pregnancy. The employer bears the burden of proof to show that the termination was not pregnancy-related.
Is severance pay required upon termination?
If an employee’s contract is terminated due to reasons such as redundancy, retrenchment, economic difficulties, technical needs, structural changes, operational requirements or unfair dismissal, they are entitled to receive severance pay.
The amount of severance pay is determined by the employee’s length of service with the employer. Employees who have served for less than a year are not entitled to any severance pay, while those who have worked for one to five years are entitled to two weeks’ salary for each completed year of service. Those who have worked for six to ten years are entitled to three weeks’ salary for each completed year of service. If an employer has served more than eleven years, they are entitled to four weeks’ salary for each completed year of service.
Under the Employment Act, employees who are exempt from receiving a pension are entitled to receive a gratuity from their employer upon retirement, termination of work or death. The gratuity must be equivalent to 5% of the employee’s monthly income for each completed month of service.
How is GoGlobal helping MNCs gain a competitive advantage in Malawi?
Malawi has made strides in attracting foreign investment, but bureaucratic hurdles such as lengthy registration processes and complex employment regulations can still pose a challenge for multinational companies (MNCs) looking to establish a presence in the country.
Engaging an Employer of Record (EOR) service provider like GoGlobal can help MNCs navigate these challenges. With expertise in hiring, payroll, and benefits administration, GoGlobal can handle the intricacies of Malawi’s employment laws, while the MNC focuses on their core business operations.
Malawi’s competitive job market also makes it difficult for MNCs to secure top talent, especially for specialized roles. GoGlobal’s Recruit & Hire solution pairs seamlessly with our EOR services, allowing clients to source and onboard the best candidates with ease.
What makes the GoGlobal experience different?
As more companies expand their business operations and hiring efforts in Malawi, GoGlobal is here to help them create a positive and localized employee experience. Our dedicated team on the ground in Malawi will meet with your newly hired workers to discuss the details of the EOR arrangement and serve as the point of contact throughout the engagement. We prioritize human-to-human interactions, utilizing cutting-edge technology solutions while ensuring a positive and customized experience for all parties involved.
What sets GoGlobal apart is our team members’ expertise in Malawi’s regulatory environment and their deep understanding of the local customs and culture. We can offer workers services in English or Chichewa and in their local time zone, ready to answer any questions that arise in terms of payroll, taxation and benefits.
Partnering with GoGlobal in Malawi can free up your team’s resources to focus on core business-growth activities and take advantage of emerging market opportunities. Let us help you navigate the complex legal and regulatory landscape in Malawi, while providing a seamless end-to-end hiring experience.
With our expert support, you can rest assured that your operations will run smoothly and efficiently – allowing you to achieve your goals and reach new heights of success in Malawi.
GoGlobal has a significant on-the-ground footprint in Africa, maintaining local offices across 18 countries spanning from North Africa to Sub-Saharan Africa. This extensive on-the-ground footprint empowers GoGlobal to offer exceptional assistance to clients in expanding their operations and building successful teams across Africa.
Find additional details on benefits and hiring in Malawi, or contact us to talk with an international HR expert.